Electronic communications have greatly increased the efficiency of purchasing individual products by a consumer. If the consumer knows the products to be purchased, a simple telephone call to a retailer, manufacturer, or distributor of that product can result in a satisfactory purchase. Greater flexibility is offered a consumer through other telecommunication systems, such as the Internet. With the Internet, a consumer may search for, locate, obtain detailed product information including pictures, and then purchase one or more products from a single manufacturer or distributor. After the consumer places the order over the Internet, the product is then shipped from that manufacturer or from a distributor to the consumer. Although the Internet is a highly efficient information, communications, and order processing medium for ordering products, physical limitations and costs with respect to the actual delivery of products which fulfill a single buyer's order remain unchanged.
Delivery of most products in the conventional retail system occurs through distributors which traditionally act as intermediaries between manufacturers and retailers (or businesses) to aggregate large volumes of low margin goods in order to minimize unit transportation costs. Distributors typically operate on very narrow profit margins, carefully balancing product selection, availability, price, and volume as needed to achieve a level of profitability that can sustain service delivery to the intended target market or markets.
An attempt by consumers to achieve lower cost and improved availability of products may be found in a form of organization known by varied terms such as buyer club, food club, buyer group, food coop, or local food cooperative. Such organizations may be formed when there is a common interest in ordering bulk quantities of products from a supplier of a common product, such as natural foods. Buyer group formation begins when one person (who usually becomes the buyer-coordinator) makes pre-arrangements with a supplier (such as a natural foods distributor) to be able to order any of a number of available products offered by that supplier. The buyer-coordinator receives an account number, a minimum dollar amount per order, an order cutoff time or schedule, and a delivery schedule and delivery point from the supplier, who provides the basic information needed for the buyer-coordinator to plan each order cycle for the local food cooperative. The cutoff time is typically expressed by both date and hour, such as 9 AM on Thursday, May 12th.
The buyer-coordinator preferably undertakes a number of activities for the food coop, which are in addition to the separate and distinct activities of each buyer. Preferably, buyer-coordinator activities include setting up the order cycle, setting product pricing, determining the exact products and final quantities of units of products to be ordered for the group, notifying the supplier as to the composite order to be placed (the total quantity of each product with all the products further being included in the single order for all the buyers in a group being referred to as the “composite order”), paying the supplier, arranging for collection of the shipment from the delivery point, transporting the shipment to a buyer pickup site, breaking down the orders by buyer, collecting payment from the buyers, and reconciling any order discrepancies. The buyer-coordinator is preferably also a buyer of products.
Buyers may preferably have limited access to buyer-coordinator related activities and preferably cannot, as one example, update the supplier with the buyer's single order nor change product pricing to the group. While the buyer coordinator preferably performs the above mentioned activities, many of these may also be performed by a retailer, a third party agent, a distributor or one or more other buyers may also handle certain of the above activities.
Each order cycle occurs in two distinct phases, an order phase and a delivery phase (a cutoff event separates these phases). The buyer-coordinator handles most tasks but will often enlist assistance from other buyers in the local food cooperative. At the beginning of each order cycle, the buyer-coordinator preferably will select a supplier and the products for that order cycle, and may send out by e-mail a list of products and prices to each of the buyers in the local coop. Alternatively, buyers may telephone, fax, or e-mail orders to the buyer-coordinator by selecting a product from a pre-printed catalogue. Orders from buyers must be received back by the buyer-coordinator by a specific date and time (i.e., say up to 9 AM on the 12th of May), which is termed in this document, the cutoff event, cutoff time, or simply cutoff. After the cutoff occurs, orders from buyers are no longer accepted for that order cycle. The buyer-coordinator then aggregates the orders into a single composite order and sends this composite order by e-mail, fax, file transfer, or telephone to the supplier. The supplier then receives the composite order as a purchase of those products by that buyer group for that order cycle, which starts the delivery phase.
The total quantities of products ordered by the buyer group affect both their availability and pricing. Some suppliers will ONLY accept orders for many products in caseload quantities (the terms “case”, “caselot”, “case lot”, “caseload”, and “case load” are used interchangeably). For those products that require caseload orders from a supplier, the product preferably will not be ordered from the supplier unless the total volume of units achieves exactly one or more of the pre-defined caseload quantities of units for that product. Therefore, if there are 12 units to a case, and the product is only sold by the case, then an order may preferably only be placed in units of 12, 24, 36, 48 and so on (ie, all the integer multiples of the 12 units). Any integer multiple of the pre-defined units that achieve one or more case lot quantities of units is referred to as an “integer multiple of case lot units”, “integer number of case lots”, “integral caselot quantity”, “case quantity”, caselot quantity”, “caseload quantity”, or a “valid order quantity”, and these terms may be used interchangeably and in the singular and in the plural to define the same concept.
Some products as noted are only sold by the case, other products are sold by the unit, and some products are sold by both the case and by the unit and achieve a price break only as one or more case quantities of units or set number of units is achieved. For those circumstances where a product is sold by both cases and by units, there are often significant pricing surcharges for placing unit orders versus caseload quantity orders.
In addition, typically a minimum dollar amount per composite order is required before suppliers will accept an order from a buyer group. This minimum dollar amount may be needed to enable a truck to achieve a sufficiently high route density to pay for the transportation costs for shipment of the product over the necessary distance to the delivery point and also may be necessary to justify the cost to prepare an order for delivery to a customer. As examples, minimum dollars required for an order may be as low as $10 and as high as $1,000 or more, but preferably range from $300 to $700. Without a total dollar order from a buyer group equaling or exceeding some minimum dollar amount, an order may not be accepted by a supplier. Finally, as volumes increase, some suppliers provide dollar volume discounts for attaining total dollar order volumes of the aggregate order which exceed pre-established threshold amounts. An example of such a threshold structure can be, say $1,000 to $2,999 achieving a 1% discount, $3,000 to $4,999 achieving a 2% discount, and $5,000 and above achieving a 3% discount.
The supplier, after receiving the composite order to purchase products from the buyer group, preferably ships the products typically by truck to a pre-established delivery point where it will be collected by one or more buyers of the group. The shipped products for that group may then preferably be brought to a separate buyer pickup site. Alternatively, the buyer pickup site may be the delivery point (for example, if a retailer is operating the buyer group). The delivery point may be a church, retail store, parking lot, or a convenient spot for the truck to meet with the party collecting the shipment. The buyer pickup site may be the home of the buyer coordinator, a home of the buyer, or as noted above, a retail store.
The shipment, which is divided by product, is typically re-distributed from product cases into separate boxes or containers sorted by buyer in which each box includes the proper quantities of units for each product that the buyer ordered. This is called “breaking down” the order. Then at pre-agreed times after break-down of the order, each buyer will retrieve the boxes or containers which contain their order. The buyer-coordinator may collect payment at the time of the buyer's pickup of the products or may require payment at the time of placement of the order (which may occur just after the cutoff).
To speed communications among buyers, buyer-coordinators of such groups often use e-mail to send out product/price lists, product availability information, and communicate planning, ordering and delivery schedules. Then buyers send back by e-mail the orders for those products they want to buy for that order cycle. While the use of the e-mail system in this fashion is more efficient than verbal telephone communications, large amounts of time are still consumed. The quantities of units for each product ordered must be tallied up for aggregation and submission to the supplier.
Typically there are numerous follow up conversations or communications that the buyer-coordinator makes to adjust order quantities to achieve the exact integer quantities of units needed to make one or more cases. This often requires numerous calls or communications as one change begets another and then another, all of which need to be coordinated and concluded between multiple buyers by the cutoff. Finally, to reduce pressure and last minute communications and achieve that amount of units allowing caseload quantity orders, buyer-coordinators will sometimes order extra quantities of products and include these in a “surplus” account. This places the extra units of those products in the group's inventory. In essence, to enable an order for a product to be placed to satisfy various buyer's orders and to minimize “pre-selling” additional units needed to achieve case quantities of units, the buyer-coordinator may choose to assume inventory risk.
To improve over manual compilation and communication of buyer orders, at least two computer software programs have been developed which operate on a personal computer. These computer software programs allow the buyer-coordinator to download product/price lists from a supplier and allow some aggregation of buyer's orders but only after the buyer-coordinator has received these orders back from the buyers. The software programs can calculate account balances for each buyer in each order cycle and can electronically submit to the supplier the composite order for the order cycle. However, both of these computer software programs use an intermittent hub and spoke communications mode which does not allow for an integrated system operating in an updated real-time mode.
Although an improvement over purely manual systems, there are many major disadvantages of the existing computer software programs. Since these programs function only by collecting order data on each individual's personal computer, they do not aggregate group orders on an ongoing basis and thus they do not allow collaboration among all buyers of the buyer group using the latest information so as to achieve optimal aggregated quantities of products. Another fundamental and critical disadvantage is the inability of each buyer, at the time the buyer is placing their order, to know what quantities that buyer will need to purchase to ensure a case lot quantity is obtained and then, as the process unfolds, to determine any further order changes might be needed or advisable. The existing computer software programs also do not allow buyers real-time access to supplier information as part of the order process. Furthermore such computer software programs are unable to automatically send notifications between buyers and to and from suppliers with respect to changes and updates which are occurring or are needed and thus they do not enable optimized orders to be created throughout the order cycle.
It would thus be desirable to have a system that minimizes the time-consuming accumulation and distribution of product ordering and delivery information and optimizes the order, payment, and delivery of products for buyers in local buyer groups.